What Does The Gates Retirement Really Mean?

A Microsoft without Bill Gates seems almost unimaginable for those who have grown up with the personal computing industry, but the day was inevitable. Even Bill Gates can't stop time, although the Vista team probably wishes he could.

The indifference from Wall Street, reflected in almost no real movement in Microsoft's stock, is perhaps most telling that the man who once terrorized the software industry by his mere existence has become less fearsome.

"The press is going to write about this, but I don't think Gates stepping away is that big a deal in terms of business impact," IDC senior research analyst Richard Shim told internetnews.com. "If Steve Jobs said he was going to leave Apple, that would be huge because he makes a lot of the decisions. Gates' last big development decision was probably Windows 95."

That's not to say Gates is a non-entity within the company, but it was clear in the Time magazine article from this past January where he, his wife Melinda and singer Bono were voted Persons of the Year, that his heart is elsewhere, namely, his charitable foundation.

"It's hard to predict, but I'm guessing Gates will be more than happy to relinquish some authority in the near-term to [Ray] Ozzie," said Dwight Davis, vice president of Summit Strategies. "Gates has some other areas of interest, and I'm sure he's not going to turn into a wallflower. If he thinks something stupid is being, done he'll say so. And Ray Ozzie is not stupid, either."

Michael Silver, research director for Gartner Group, agreed that fresh eyes were needed to tackle the problems facing Microsoft. "Switching at this point and having a company less identified with him and someone to take a fresh look at Windows Live and Office Live and look at the competition like Google may be helpful for them in the long run. It's possible he recognized that, but also he's getting to the point where he wanted to do other things," he said.

"Bill had indicated some time ago he was going to transition out of the company in this timeframe," said Rob Enderle, principal analyst for The Enderle Group. "It?s time, his interests have moved to other things and he really didn?t have the skills to be the Chief Architect in the current decade anyway."

What seems to be in agreement among the industry watchers is that Microsoft is losing its relevancy in the industry. The buzzwords of the Internet in 2006 ? Web 2.0, RSS, Blogs, Ajax ? were not Microsoft creations.

"The challenge facing Microsoft is so large, they really need to reinvent themselves in the Web era," said Mitch Kapor of the The Open Source Application Foundation and long-time Ozzie acquaintance. "They have these monopoly positions and vast amounts of money, but strategically, if they don't reinvent themselves, they will become irrelevant."

Silver discounts this. "When were they ever an innovative force? They were late to the Internet, they didn't have the first spreadsheet, didn't have the first word processor, NT 4 was basically OS/2 with a different interface. What they have always done is take the best the world has to offer and put their spin on it," he said.

Several of the people we spoke to think Ozzie was what Microsoft really wanted when it acquired Groove Networks last year. Whether or not it was to have him replace Gates is the only question on their minds. "I'm sure somewhere that was somewhere on their minds, I don't know if it was foreground or background, but it had to be somewhere in that territory," said Kapor.

"Groove was a strange product acquisition. Everybody raves about it but nobody uses it. I think they bought Groove to get Ray Ozzie, maybe not for this role but to get him," said Greg DeMichillie of Directions on Microsoft.

But while products like Office Live and Vista face problems today, Ray Ozzie needs to look down the road and not be dealing with those problems. "The stuff that's baked in terms of Windows and Office, hopefully that's not something he has to worry about. Hopefully he can be the visionary he has to be. Investments that need to come to fruition in five years need to start today," said Silver.